The initiative, led by President Donald Trump’s daughter Ivanka, has garnered commitments from 300 companies to provide 12 million training opportunities in the years ahead. But there are questions about how much the administration is willing to spend to help U.S. workers, whether the agreements by companies will result in higher salaries and whether employers will stick to their nonbinding pledge if the economy sours.
A look at the celebratory rhetoric:
Ivanka Trump: “This administration believes that every American should have a chance to earn a great living doing work that they love. … The president’s call to action for the pledge has become a full-blown national movement. Over the last year, more than 300 businesses, 300 businesses, have signed the pledge, businesses large and small, and today we celebrate reaching 12 million pledged commitments. … This pledge is more than just a number. Every single pledge is a commitment to the promise of an individual and his or her potential.”
Vice President Mike Pence: “That is an astonishing accomplishment.”
The Facts: It’s much too early to declare the pledge a game changer for working Americans.
Spending cut
For one thing, the government has not devoted significant spending to training workers. In fact, the Trump administration has come up with budget proposals calling for cuts in that area. The government spends just 0.03% of the gross domestic product on job training, a level of support that has been halved since 2000, according to the Paris-based Organization for Economic Co-operation and Development. Of the 36 countries in the organization, only Japan and Mexico spend less than the U.S. by that measure.
By having companies sign the pledge, the Trump administration is relying on the private sector to take on more of the financial burden of training workers. It’s unclear whether the commitment by 300 entities will be honored during the half-decade horizon if the economy begins to weaken and companies have less incentive to invest in employees.
Nor is it clear how many workers were already going to be trained, absent the initiative. In many cases, the pledge simply confers a presidential seal of approval on what some companies are doing anyway.
Not college
Major corporate leaders such as IBM CEO Ginni Rometty have worked with the administration and sincerely committed company resources to training workers. But she also told reporters at an event this year that the government should expand its grant and student debt programs to what were later described as “career-oriented learning programs” other than colleges. That means some workers would need to finance their training with personal debt. Other companies such as the tech firm Infosys have lengthened their training programs and partnered with universities.
Yet on the whole, companies have done relatively little to invest in workers — who increasingly hold college degrees — by paying them more money.
Until 2003, compensation and corporate profits had moved roughly in sync, according to figures compiled by the Bureau of Economic Analysis. But they have sharply diverged in the past 15 years as profits shot upward while spending on employee pay has crept up much more slowly. This gap between profits and incomes has persisted under Trump.
A key victory
The Trump administration can claim one small victory as the number of registered apprentices — a key initiative — increased 10% last year to 585,026 people, according to the Labor Department.
It’s also worth putting the 12 million commitments for job training over five or so years into context.
Roughly 20 million people enroll in a college or university annually, according to the government. This means that plenty of Americans are already seeking out training, though not necessarily the kind of training that employers say they want.